FASB Concerned with Complexity of Financial Reporting

February 17, 2006 (PLANSPONSOR.com) - The Financial Accounting Standards Board (FASB) has identified issues with the Securities and Exchange Commission's (SEC) "Off Balance Sheet Report" that it believes create obstacles to transparent financial reporting.

In its response to the SEC’s “Off Balance Sheet Report” the FASB discusses a number of fundamental structural, institutional, cultural, and behavioral forces that it believes cause complexity and impede transparent financial reporting, according to a press release.

The FASB’s response provides an update on FASB’s activities and projects intended to address and improve outdated, overly complex accounting standards. These areas include, according to the release:

  • accounting for leases;
  • accounting for pensions and other post employment benefits;
  • consolidation policies;
  • accounting for financial instruments;
  • accounting for intangible assets; and
  • conceptual and disclosure frameworks.

The FASB said it has also undertaken several initiatives aimed at improving the understandability, consistency, and overall usability of existing accounting literature, through codification, by attempting to stem the proliferation of new pronouncements emanating from multiple sources and by developing new standards in a “principles-based” or “objectives-oriented” approach.

The FASB response with recommendations is  here .